# Setting up cost normalization rules

Polaris can be set up to automatically calculate normalized hours and costs for specified users. Normalized hours can be viewed and exported to Excel using reports.

To create and assign a cost normalization rule:

1. Go to Administration > Cost Normalization Rules.
2. Complete the fields that display.
3. Assign normalization rules to users in their user profiles.

Field name

This field is used to…

Normalization Period

Select the period over which calculations are made, either Weekly or Monthly.

For example, if you select Weekly, the normalization factor will be calculated as follows:

Scheduled hours for a week / Actual hours worked in a week

Hours To Normalize

Select either All Hours or CapEx Hours First. Select CapEx Hours First to ensure all possible CapEx hours are included as costs.

For example:

An employee is assigned a work schedule of 8 hours per day, 5 days a week. Their assigned hourly cost is \$50/hour.

In a single week, they work 30 CapEx hours on Project A and 20 OpEx hours on Project B.

If CapEx Hours First is selected in their assigned normalization rule:

Normalization factor for CapEx hours

= Scheduled hours / Actual CapEx work hours

= 40/30

= 1 (since normalization factor can’t be greater than 1)

Normalization factor for OpEx hours

= Scheduled hours / Actual OpEx hours

= (Total scheduled hours - Actual CapEx hours) / Actual OpEx hours

= 40-30 / 20

= 10/20 (= 0.5)

Actual normalized cost

= Actual hours worked * Cost per hour * Normalization factor

Cost allocated to Project A

= 30 hours * \$50/hour * 1

= \$1500

Cost allocated to Project B

= 20 hours * \$50/hour * 10/20

= \$500

If All Hours is selected:

Normalization factor for hours

= Scheduled hours / actual work hours

= 40/50 (= 0.8)

Cost

= Actual hours worked * Cost per hour * Normalization factor

Cost allocated to Project A

= 30 hours * \$50/hour * 40/50

= \$1200

Cost allocated to Project B

= 20 hours * \$50/hour * 40/50

= \$800

Exclude Time Off

Select a time off type to exclude from the scheduled hours worked total when normalized hours and costs are calculated.

You would typically exclude unpaid time off from normalization calculations, but include paid time off.

For example:

An employee is assigned a work schedule of 8 hours per day, 5 days a week. Their assigned hourly cost is \$50/hour.

In a single week, they work 30 hours and take 16 hours of vacation time.

If Vacation time off is selected to be excluded:

Normalization factor

= Scheduled hours / Actual hours worked

= (Scheduled hours - Vacation hours) / Actual hours worked

= (40 - 16) / 30

= 24/30 (= 0.80)

Actual normalized cost for days worked

= Actual hours worked * Cost per hour * Normalization factor

= 30 hours * \$50/hour * 24/30

= \$1200

If Vacation time off is included:

Normalization factor

= Scheduled Hours / Actual hours worked

= 40/46 (= 0.87)

Actual normalized cost for work days

= Actual hours worked * Cost per hour * Normalization factor

= 30 hours * \$50/hour * 40/46

= \$1304.35